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“Someone’s sitting in the shade today because someone planted a tree a long time ago.”

— Warren Buffett

The wisdom of Warren Buffett reflects a value-based philosophy about investing that says investors are buying shares in a business, and encourages strategic thinking about investment time horizon. Before placing a buy order for a stock, a great question we can ask is whether we would still be comfortable making the investment if we couldn’t sell it for many years?

A “buy-and-hold” approach may call for a time horizon that spans a long period of time — maybe even lasting for a twenty year holding period. Suppose such a “buy-and-hold” investor had looked into buying shares of O’Reilly Automotive, Inc. (NASD: ORLY) back in 2002. Let’s take a look at how such an investment would have worked out for that buy-and-hold investor:

Start date: 12/16/2002


End date: 12/15/2022
Start price/share: $13.23
End price/share: $807.20
Starting shares: 755.86
Ending shares: 755.86
Dividends reinvested/share: $0.00
Total return: 6,001.28%
Average annual return: 22.81%
Starting investment: $10,000.00
Ending investment: $610,453.42

As we can see, the twenty year investment result worked out exceptionally well, with an annualized rate of return of 22.81%. This would have turned a $10K investment made 20 years ago into $610,453.42 today (as of 12/15/2022). On a total return basis, that’s a result of 6,001.28% (something to think about: how might ORLY shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Here’s one more great investment quote before you go:
“October is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” — Mark Twain